Feds Seek to Overhaul Independent Contractor, Joint Employer Rules
The U.S. Department of Labor (DOL) announced that it intends to withdraw the independent contractor final rule issued on Jan. 7, 2021, and rescind a current rule on joint employer relationships under the Fair Labor Standards Act (FLSA) which took effect on March 16, 2020.
NAHB is deeply disappointed in DOL’s decision to withdraw and rescind these two rules. We support both rules, believing they are improvements over prior interpretations and provide more clarity for the residential construction industry.
DOL said it is seeking to withdraw the final independent contractor rule for the following reasons:
- The rule adopted a new “economic reality” test to determine whether a worker is an employee or an independent contractor under the FLSA.
- Courts and the department have not used the new economic reality test, and FLSA text or longstanding case law does not support the test.
- The rule would narrow or minimize other factors considered by courts traditionally; making the economic test less likely to establish that a worker is an employee under the FLSA.
The agency is also seeking to rescind its current joint employer rule.
At the beginning of 2020, DOL announced a final rule to provide a clearer methodology for determining joint employer status under the FLSA. The rule offered employers clarity and certainty regarding their responsibility to pay federal minimum wage and overtime for all hours worked over 40 in a work week.
The rule, which became effective in March 2020, was subsequently challenged by 18 states on the grounds that the rule was invalid.
On Sept. 8, the federal district court for the Southern District of New York agreed, stating that the rule was contrary to the FLSA and was “arbitrary and capricious” due to its failure to explain why the DOL had deviated from all prior guidance or consider the effect of the rule on workers.
DOL is taking comments from the public on both proposed rules and NAHB will weigh in on each of the rules. The comment period ends on April 12, 2021.
For more information, contact David Jaffe.
Latest from NAHBNow
Aug 15, 2025
Successful BUILD-PAC Events Raise $140,000Home builders associations (HBAs) across the United States are raising funds for BUILD-PAC, NAHB's bipartisan political arm, during its 2025-26 cycle. Two recent HBA events raised more than $140,000 combined.
Aug 14, 2025
NAHB Releases New Housing Favorability Assessment for HBAsLocal associations that complete the assessment will learn how their community compares to others and NAHB’s State and Local team will help the association develop a long-term plan to create a favorable housing environment in their community.
Latest Economic News
Aug 15, 2025
June Single-Family Permits Slumps, Multifamily GainsSingle-family housing permits continued a downhill trend for the sixth month in a row. The continuous decline in single-family permits highlights persistently weak housing demand, tied to affordability challenges like high mortgage rates.
Aug 15, 2025
Credit Conditions for Builders TightenFor the fourteenth consecutive quarter, builders and developers reported tighter credit conditions on loans for residential Land Acquisition, Development & Construction (AD&C) in NAHB’s quarterly survey on AD&C Financing.
Aug 14, 2025
Building Material Prices Rise in JulyPrices for residential building materials rose again in July, marking the largest year-over-year increase in over two years. The underlying price growth trend remained the same, with service prices continuing to grow at a faster pace than goods prices. Similar to last month, parts for construction machinery and metal molding/trim experienced significant price growth, as both increased over 25% compared to last year.